Rates on some fixed mortgages have dropped by a full percentage point in the past few months, opening up an opportunity for Canadians eyeing the spring housing market or with a mortgage of their own up for renewal.
While experts say there’s little downside to securing a cheaper rate today, committing to a long-term mortgage with rate cuts in the forecast might end up costing some households more.
Before the end of 2023, the lowest rate available on insurable five-year fixed rate mortgages dropped below five per cent, the first time it fell below that benchmark since last spring.
As of Thursday, rates as low as 4.84 per cent were available for that same product at multiple Canadian lenders, according to James Laird, co-CEO of Ratehub.ca.
That’s down more than a percentage point from highs seen last fall, Laird tells Global News.
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As the Canadian economy has weakened and inflation has shown signs of cooling, forecasters are shifting their expectations for the Bank of Canada’s policy rate from “higher for longer” to now thinking “rate cuts are coming sooner rather than later,” Laird says.
That’s driven down yields on products like the government of Canada’s five-year bond in recent months — the key benchmark for fixed-rate mortgages of the same length.
The popular five-year fixed product is not the only mortgage seeing cheaper rates to start the new year. Mortgage Outlet COO and broker Leah Zlatkin notes that three-year fixed mortgages are also down from recent highs, floating just above the five-per cent market.
“It is a really good time to get a lower (fixed) interest rate than you would’ve been getting for the last year,” she tells Global News.
Falling rates spurs ‘deja vu’ from 2023
But Zlatkin also warns that there are risks out there that could “quell” the easing in the bond market.
Because yields — and by extension, fixed mortgage rates — are tied to expectations for the Bank of Canada’s policy rate, anything that pushes back forecasts for eventual rate cuts could send fixed rates in the market back up.
Inflation could stay elevated, for example, keeping the central bank from easing rates. Such a move would limit activity in the housing market as fewer people qualify for rates they can afford, Zlatkin says.
Laird says the easing in the bond market today is “almost deja vu” from last year, when the Bank of Canada announced a “conditional pause” in its rate hike cycle.
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At that time, market watchers began to speculate that rate cuts were on the horizon, bringing down yields and fuelling a spring thaw in the cooling housing market. But those hopes were cut short in June and July when the Bank of Canada returned with back-to-back rate hikes, and the bond market saw yields surge soon after on the “higher for longer” mentality.
Laird warns that any number of global events or inflation snags not yet in the forecasts could affect the Bank of Canada’s timeline for rate cuts.
For that reason, there’s “never a downside” for Canadians who are thinking about getting a mortgage for the first time, or who have one coming up for renewal in the months ahead, to get a rate hold now when the market is easing.
By inquiring with a mortgage professional, you can secure a rate at today’s prices, typically for 120 days in advance of when you need it. If bond yields continue to ease and rates drop further, you can take advantage of the new rates right up until you sign for the new mortgage; if the trend reverses and rates rise, you’re similarly protected, Laird notes.
The 4.84 per cent rate available on most comparator sites is open largely to homeowners or buyers with an insurable mortgage, Laird says, where lenders can afford to offer the most competitive rates.
Zlatkin says that for those with mortgages up for renewal in the first half of 2024, now is the time to get documents in order and reach out to a broker or other professional to kick off the renewal process.
An existing lender is likely to offer a competitive five-year fixed rate at renewal, but will be more inclined to negotiate a lower rate if you’re working with a broker to put another offer on the table, she says.
There’s another option for mortgage consumers to consider, Zlatkin notes. Variable-rate mortgages are currently more expensive than most fixed-rate options, as they’re tied to lenders’ prime rate, which itself is informed by movements in the Bank of Canada’s policy rate.
Currently, five-year variable rate options are priced around 6.2-6.7 per cent, Zlatkin says. But if forecasts are to be trusted that the central bank rate is going to decline, those with a variable mortgage could see their rate drop in concert with those cuts.
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Depending on the type of payments involved in their mortgage, a household could see their payments start higher but drop as the rate cycle eases if they were to take out a variable rate.
There are plenty of risks that come with this approach — as happened last year, rates could still rise rather than decline in the year to come — but Zlatkin notes that if rate cuts do materialize, a variable rate holder could pay less than someone with a fixed rate over the same timeframe.
“Consumers in the marketplace should start pricing that into their considerations,” she says.
Laird says that based on activity on Ratehub’s mortgage pricing and leads tools, there seems to be “early” interest among buyers ahead of the traditionally busy spring housing market.
Coming off of a very cool winter season, which saw few active buyers and some would-be sellers forced to shelve their plans for the new year, Laird predicts the housing market is due for a “strong start to the year.”
“There should be a lot of pent-up demand, just because there weren’t a lot of transactions last year,” he says.
VANCOUVER – Contract negotiations resume today in Vancouver in a labour dispute that has paralyzed container cargo shipping at British Columbia’s ports since Monday.
The BC Maritime Employers Association and International Longshore and Warehouse Union Local 514 are scheduled to meet for the next three days in mediated talks to try to break a deadlock in negotiations.
The union, which represents more than 700 longshore supervisors at ports, including Vancouver, Prince Rupert and Nanaimo, has been without a contract since March last year.
The latest talks come after employers locked out workers in response to what it said was “strike activity” by union members.
The start of the lockout was then followed by several days of no engagement between the two parties, prompting federal Labour Minister Steven MacKinnon to speak with leaders on both sides, asking them to restart talks.
MacKinnon had said that the talks were “progressing at an insufficient pace, indicating a concerning absence of urgency from the parties involved” — a sentiment echoed by several business groups across Canada.
In a joint letter, more than 100 organizations, including the Canadian Chamber of Commerce, Business Council of Canada and associations representing industries from automotive and fertilizer to retail and mining, urged the government to do whatever it takes to end the work stoppage.
“While we acknowledge efforts to continue with mediation, parties have not been able to come to a negotiated agreement,” the letter says. “So, the federal government must take decisive action, using every tool at its disposal to resolve this dispute and limit the damage caused by this disruption.
“We simply cannot afford to once again put Canadian businesses at risk, which in turn puts Canadian livelihoods at risk.”
In the meantime, the union says it has filed a complaint to the Canada Industrial Relations Board against the employers, alleging the association threatened to pull existing conditions out of the last contract in direct contact with its members.
“The BCMEA is trying to undermine the union by attempting to turn members against its democratically elected leadership and bargaining committee — despite the fact that the BCMEA knows full well we received a 96 per cent mandate to take job action if needed,” union president Frank Morena said in a statement.
The employers have responded by calling the complaint “another meritless claim,” adding the final offer to the union that includes a 19.2 per cent wage increase over a four-year term remains on the table.
“The final offer has been on the table for over a week and represents a fair and balanced proposal for employees, and if accepted would end this dispute,” the employers’ statement says. “The offer does not require any concessions from the union.”
The union says the offer does not address the key issue of staffing requirement at the terminals as the port introduces more automation to cargo loading and unloading, which could potentially require fewer workers to operate than older systems.
The Port of Vancouver is the largest in Canada and has seen a number of labour disruptions, including two instances involving the rail and grain storage sectors earlier this year.
A 13-day strike by another group of workers at the port last year resulted in the disruption of a significant amount of shipping and trade.
This report by The Canadian Press was first published Nov. 9, 2024.
The Royal Canadian Legion says a new partnership with e-commerce giant Amazon is helping boost its veterans’ fund, and will hopefully expand its donor base in the digital world.
Since the Oct. 25 launch of its Amazon.ca storefront, the legion says it has received nearly 10,000 orders for poppies.
Online shoppers can order lapel poppies on Amazon in exchange for donations or buy items such as “We Remember” lawn signs, Remembrance Day pins and other accessories, with all proceeds going to the legion’s Poppy Trust Fund for Canadian veterans and their families.
Nujma Bond, the legion’s national spokesperson, said the organization sees this move as keeping up with modern purchasing habits.
“As the world around us evolves we have been looking at different ways to distribute poppies and to make it easier for people to access them,” she said in an interview.
“This is definitely a way to reach a wider number of Canadians of all ages. And certainly younger Canadians are much more active on the web, on social media in general, so we’re also engaging in that way.”
Al Plume, a member of a legion branch in Trenton, Ont., said the online store can also help with outreach to veterans who are far from home.
“For veterans that are overseas and are away, (or) can’t get to a store they can order them online, it’s Amazon.” Plume said.
Plume spent 35 years in the military with the Royal Engineers, and retired eight years ago. He said making sure veterans are looked after is his passion.
“I’ve seen the struggles that our veterans have had with Veterans Affairs … and that’s why I got involved, with making sure that the people get to them and help the veterans with their paperwork.”
But the message about the Amazon storefront didn’t appear to reach all of the legion’s locations, with volunteers at Branch 179 on Vancouver’s Commercial Drive saying they hadn’t heard about the online push.
Holly Paddon, the branch’s poppy campaign co-ordinator and bartender, said the Amazon partnership never came up in meetings with other legion volunteers and officials.
“I work at the legion, I work with the Vancouver poppy office and I go to the meetings for the Vancouver poppy campaign — which includes all the legions in Vancouver — and not once has this been mentioned,” she said.
Paddon said the initiative is a great idea, but she would like to have known more about it.
The legion also sells a larger collection of items at poppystore.ca.
This report by The Canadian Press was first published Nov. 9, 2024.
